Underspend (Supplementary) [4]

Session date: 
January 14, 2004
Question By: 
Elizabeth Howlett
GLA Conservatives
Asked Of: 
Bob Kiley - Transport Commissioner


Do you mind if I go back to this conversation you had about your freedom to get the work done? What you are saying is that the Infracos are contracted to do this work and cannot do it; you have got money left over, but the contract is such that you are not allowed to outsource this work, which is badly needed, because of the contract. Who " government I presume " would you have to go to to ask for variance to the contract?

Can you tell me just how many penalties you are imposing on these Infracos? I can remember a conversation we had with the Minister for London, I think it was Keith Hill. I questioned him about how tough these penalties were going to be. He was very flaky; he did not know.

Clearly, it is easier for these Infracos to pay a penalty than actually fulfil the contract. So is it Government we have to lobby for this?

Supplementary To: 


Answer for Underspend (Supplementary) [4]

Answer for Underspend (Supplementary) [4]

Answered By: 
Bob Kiley - Transport Commissioner

Yes and no. The `no" part of it is that the contracts are what they are. The only appeal from a contract that gets in the way of progress is to renegotiate the contract, and the time may come when some provisions are going to have to be renegotiated, and the infrastructure companies might be actually interested in that as well.

I do not have to repeat all the arguments about the contracts, but on contracts with millions of words and pages, it should not be surprising that there will have to be some changes in the contract, and probably sooner rather than later.

Yes, though, to your question in that, when we did settle with the Government last year, we tried to anticipate as many of these anomalies as we could, including the slow start and renewal, overruns on the PFIs. That was a detailed settlement and the Government has agreed, depending on which subject we are talking about, to try to make us whole.

That would be part of the discussion that will occur during the Spending Review. There is a lot at stake in the Spending Review because, among other things, in addition to trying to get more money to close revenue operational gaps, we have to make ourselves whole on PPP, since we never created these contracts in the first place, and they appear to recognise that.

But the refrain that we keep hearing is that level funding, that is the same funding that you have right now, may be the most that we can expect. Therefore, our business plan has to reflect that, because we are required by law to run a balanced budget.

I think we are at one of those points in time where there is a lot of uncertainty in the air. PPP contracts are really just getting under way. It does take a year to mobilise the renewals, at least. We are watching the maintenance activities; we are not entirely happy with the way things are going, but we do not want to be judgemental too quickly. We are all going to have to have a little more patience. Not a lot more patience; a little more patience for just a few months and, at that point, we will be doing an appraisal of exactly where we are.